Don’t let the rising tide of liability sink your business

Careful employee screening and training crucial

Both professional and general liability are on the rise in home care. The industry is experiencing a higher number of substantial claims, which translates into higher premiums for providers. The claims-cost spiral has been accelerating over the past decade. "The number of claims and the severity are increasing. We’re looking at much larger amounts than 10 years ago, and some types of claims that we didn’t even see then," says Michael Bernstein, assistant vice president for health care professional liability at New York City-based AIG Healthcare, one of the largest underwriters of professional liability for the home care industry.

"It was rare eight or nine years ago to see $1 million exposures. Now it’s not rare," agrees Bill Thompson, CIC, principal of Smith, Bell & Thompson, an administrative and managing general agent of professional, property, and casualty insurance. Thompson is based in Burlington, VT.

The increases come from a confluence of national and industry- specific economic changes, clinical and technological advances, and an increasingly risk-shifting, litigious society.

The home care sector’s success is partially to blame. Its near double-digit growth every year but the last two of the preceding 10 may simply have outstripped some of the risk management practices seen in more mature industries, Bernstein says.

Such growth, combined with a booming national economy, has also outpaced the industry’s supply of qualified caregivers. This has led some providers to hire people without carefully checking their background and credentials, and send staff into care situations that are beyond their capabilities. "They have these long shifts that have to be covered, and they need a warm body, so they send someone," explains Kathy Dodd, RN, MHA, founder and chief executive officer of The Corridor Group, a Kansas City, KS-based home care consulting firm.

Providers today also offer more involved services to a broader group of sicker patients. "There are more and more services now provided, a lot that previously were only in hospital or acute care settings," says Bernstein. In-home mini-intensive care units, with sophisticated equipment and increasingly invasive procedures, carry higher risk. So too, do services provided to patients other than the elderly, particularly children. "In pediatrics the dollars go up dramatically with problems," Thompson asserts.

With sicker patients come continually evolving, higher standards of care. Staying on the clinical leading edge requires constant vigilance and resources. That’s tough, especially when some providers are barely treading water.

"The industry as a whole is going through tough times. There’s a lot of pressure to control costs. Many agencies are just hanging on, and they’re focused on the bottom line. Risk management is an expense people don’t want to take on right now," Bernstein explains.

As if that weren’t enough, in an effort to expand their private duty service, providers may enter poorly structured service agreements or contract with other companies that have different care standards, exposing themselves to more risk in the process.

Toss in an increasingly litigious society, more malpractice attorney involvement and the limited impact of tort reform, and you have a simmering pot of liability risk. "Home care providers are incredibly vulnerable right now. It’s not that they’re providing bad care, but malpractice lawyers used to an institutional model of care will try to impose the same type of standards on home care," explains Elizabeth Hogue, a health care attorney in Burtonsville, MD.

Despite the seemingly poor odds, however, there’s no need to fold your business hand. Implementing the following procedures can help you effectively manage risk while continuing the same type of services you now provide.

Set up a risk management program.

A risk management program is the front-line defense in minimizing liability. It is a systematic and ongoing evaluation of all potential liability issues involved in running your business, according to Thompson. It should cover everything, including employment practices and directors’ and officers’ exposures to patient care policies.

After identifying each exposure area, you should determine the level of risk it poses, and the best way to deal with it. If you consider something an insignificant risk, you may decide to ignore it. On the other hand, if something seems too hazardous, you may choose to avoid it altogether. For example, you may avert bad contract risk by either not signing a new one or terminating an existing one.

Sharon Spencer, risk manager for Arlington, TX-based Nursefinders, works with both senior executives and branch managers. She encourages staff to report any incidents — even minor ones — using Nursefinders’ Unusual Occurrence Report. (See sample report, inserted in this issue.) "I look at, What have you done to take care of this?’ What controls were in place that didn’t work?’ and What can we do to make sure this doesn’t happen again?’ I also look for anything open-ended. For example, don’t just say you took the person to the ER and leave it at that," she explains.

Spencer codes reported incidents and uses them to identify trends and work with managers to intervene appropriately. "If a person’s name appears on reports more than once, it’s a red flag, and we [take the approach] of, Let’s nip this in the bud!’" she says.

Setting up a risk management program sounds complicated and expensive, but it needn’t be. Your insurance carrier can help identify risk and setup mechanisms to manage it, such as training seminars, Bernstein advises. The energy and expense of a full-blown program may seem prohibitive in today’s tough operating environment, but scrimping on risk management pennies now may translate into significant outlays tomorrow. Plus, programs don’t have to be all or nothing, he adds.

"For small agencies, it’s tough to have risk management, but they need it the most. It’s better to do a little something than nothing. They can slowly implement things. Doing nothing is the wrong attitude."

Although she carries the risk manager title in a large company, Spencer says risk management is a team effort regardless of the size of one’s organization. "It’s really everybody’s hat. The people who drive it are the branch and clinical managers. They shoulder the responsibility for the safety and risk of our employees and customers," she says.

Provide training.

Liability statistics are difficult to come by. A recent analysis of 500 claims by Smith, Bell & Thompson, however, shows that some of the most frequent claims involve incidents that reflect lack of employee skills and/or training, such as patient scald burns and falls. Medication errors, patient abuse, and other signs of inadequate or negligent care also rank highly. (See claims by type of incident, at right.) Other common areas of general liability exposure include employees’ use of non-owned vehicles, employee theft, and medical equipment product liability, says Thompson.

Home Health Care Industry Claims Data

Claims by Type of Incident*

Type of Incident 
% of Reported Claims
Medication Errors 
Blood Draw 
Catheter Errors 
Negligent Diagnosis/Treatment Error
Negligent Hiring/Supervision
Needlestick/Improper Disposal
Sexual Assault
Home Fetal Monitoring
Birth-related Injury
Retained Foreign Body
Negligent Subcontracting
Wrongful Termination


Claims by Type of Provider*

Type of Provider % of Reported Claims
Home Health Aide
Physical Therapist

*Based on a recent sample of 500 reported claims for home health care professional liability coverage.
Source: Smith, Bell & Thompson, Burlington, VT.

With so many claims attributable to poor training, and the success of risk management riding on team efforts, training for both managers and staff is crucial. It is important to go back to the basics of patient care when training staff, Dodd advises. "They should know that if the water’s too hot to the wrist, they shouldn’t put their patient in the tub. Some companies get thermometers that check the water, but most people won’t go to that expense," she says.

Screen, screen, screen.

Performing thorough background checks on employees is one of the best risk management practices. It helps reduce, but won’t eliminate, liability. "In private duty care, you have nonprofessionals spending long periods of time in people’s homes, and you hope you screen well enough, but the bottom line is that people slip through the cracks," says Dodd.

There’s no clear answer about what efforts are either inadequate or overdone. "As an insurance underwriter, I would say, Check everything.’ If you do a criminal check in one county but three counties over the person had violations, you’ll never know. The violators stay one step ahead. Industry standards are needed," says Bernstein. (For more on employee background checks, see Private Duty Homecare, July 1998, p. 93.)

"If you see things that look suspicious, go beyond [the minimum requirement in your state]. Private investigation firms are cheaper than they were even two years ago. You need to evaluate the $75 [investigation] cost against the risk and revenue involved. Ask yourself if it’s worth it if this one client has $200,000 revenue potential in one year and you’re not willing to spend $75," Dodd says.

Check competencies; match caregiver skills with client needs.

Things are always clearer in hindsight. "Most people go wrong by failing to identify risk up front. They realize after the fact they should have sent in Jane instead of Mary, or trained Nancy on trach technique," says Thompson. The best prevention against putting caregivers in situations beyond their capabilities is to check competencies and have a system to match their skills with client needs.

At Nursefinders, the branch or clinical manager evaluates staff competencies and determines whether each staff member is capable of caring for any particular client, Spencer reports. Each employee undergoes competency assessment upon hire, annually, and as needed. "If there’s an incident of overstepping their scope of practice, they are brought in, and must go through orientation and counseling, with documentation placed in their personnel file," she reports.

Actively supervise.

Make unscheduled supervisory visits, especially on night shifts. "You need to show up at 2 a.m. and find out what is going on," Dodd advises. To avoid misunderstandings, inform both clients and staff at the time of case opening that such late night visits are a normal supervisory function.

Maintain professional boundaries.

While it’s important to provide good service, don’t go overboard, Hogue advises. Bending over backwards in every way can cause you to flop. "If you raise expectations too much, it can create problems when you’re not perfect. This is really tough. Providers tend to get committed and enmeshed. It makes home care strong, but the flip side is that it increases risk," she explains.

Balance excellent customer service with realistic performance expectations by helping staff maintain professional boundaries with clients. Prohibit them from giving out their home phone numbers, build strong relationships with both clients and employees so that each will contact you with problems or concerns, and periodically introduce new staff into cases, Hogue advises.

Some providers allow staff to volunteer or work privately on cases where they also work as employees, but this is a policy headed for disaster, she says. "You can’t tell me when a nurse comes back at night that she’s not viewed on company time, as either an independent contractor or employee, by patients."

Document well.

"You can do everything right, but if you don’t document, there’s no proof that you followed appropriate standards of care," Bernstein advises. Problems result from both skimpy and chatty documentation.

Don’t be afraid to question doctors.

Home care standards of care are continually evolving as new technologies and interventions move out of institutional settings and agencies accept more complicated cases. Physicians who don’t refer many patients into home care may not be aware of current standards. This is particularly true in areas such as wound care, according to Hogue. "Most practitioners can remember when the application of Betadine was considered to be consistent with applicable standards for wound care. There is now general agreement that the standard of care specifically excludes the use of Betadine," she explains.

If you receive orders that are out of step with current treatment standards, "you have a legal obligation to obtain changes," Hogue advises. If you can’t get the physician’s cooperation, then don’t accept the case.

Closely scrutinize contracts.

Subcontract relationships, whether they involve you providing staffing to other organizations or agencies supporting some of your cases, can be risky. In either case, if the entity you contract with has lower standards of care, lesser hiring and training criteria, or insufficient staffing, you may increase your exposure.

If you’re providing supplemental staffing to others, keep your ears to the ground to pick up any signals of problems. "Don’t put people into bad situations. If an organization failed their accreditation survey or you hear they’re struggling financially, it’s a recipe for disaster," says Bernstein.

Don’t allow staff to chauffeur.

"Never allow staff to drive patients in their own cars. If they must accompany a patient, have them go in a taxi," Hogue says simply.

Dodd concurs strongly when asked about employees driving clients in either their own or clients’ cars. "It’s best to educate staff not to do it, but the clients put workers in a terrible situation. They say, My son has to work,’ or I won’t tell anybody.’ They give all kinds of excuses."

Sometimes clients genuinely have no means of making it to necessary appointments, and agencies may feel compelled to enter the chauffeur business. If you can’t say no, then establish hurdles that discourage both clients and employees, Dodd recommends. Start with a policy that states your position. Require clients to obtain riders adding the employee-driver to their insurance policy, mandate certain coverage limits and sign waivers releasing the company from any liability.

Nursefinders strongly discourages staff from driving customers; however, it will grant exceptions under extenuating circumstances, according to Spencer. Some of its hurdles include rechecking the employee’s driver’s record, verifying both the employee’s and customer’s automobile insurance coverage, and requiring a liability waiver from customers. Additionally, the corporate chief financial officer individually reviews such requests. One that was recently approved involved an elderly, private pay customer of eight years who suffered a stroke and needed to see his doctor every week, Spencer reports.


Michael Bernstein, Assistant Vice President for Health Care Professional Liability, AIG Healthcare, 175 Water St., Eighth Floor, New York, NY 10038. Telephone: (212) 458-1710.

Kathy Dodd, RN, MHA, Founder and Chief Executive Officer, The Corridor Group, 6405 Metcalf Ave., Suite 108, Kansas City, KS 66202. Telephone: (913) 362-0600.

Elizabeth Hogue, Attorney, 15118 Liberty Grove Drive, Burtonsville, MD 20866. Telephone: (301) 421-0143.

Sharon Spencer, Risk Manager, Nursefinders, 1200 Copeland Road, Suite 200, Arlington, TX 76011. Telephone: (817) 462-9083.

Bill Thompson, CIC, Principal, Smith, Bell & Thompson, 102 S. Winooski Ave., P.O. Box 730, Burlington, VT 05402-0730. Telephone: (800) 735-1800.